- You are here:
- Home »
- Top Story »
- Is a blended document review rate of $466 per hour … um … excessive?
Is a blended document review rate of $466 per hour … um … excessive?
23 September 2013 – We have done a fair amount of reporting on the In re Citigroup Inc. Securities Litigation, a shareholder lawsuit against Citigroup which involved a lot of guns and fire over contract attorneys, a move by a shareholder to challenging the firm’s fees as excessive.
Kirby McInerney, a New York-based plaintiffs’ firm, represented shareholders who in 2007 brought a class action in Manhattan federal court accusing Citigroup of hiding tens of billions of dollars in toxic mortgage assets. Citigroup agreed last year to settle the lawsuit for $590 million.
The agreement resolved claims for massive losses after the bank failed to take timely write-downs on collateralized debt obligations, many backed by subprime mortgages, and engaged in self-dealing transactions that hid the risks.Citigroup has denied wrongdoing.
Kirby McInerney sought almost $100 million in fees, including some for outside contract attorneys, according to court filings.
Ted Frank, a Citigroup shareholder and well-known class action reform activist, objected to the fee request, which he said included rates that were significantly higher than typical hourly rates for contract attorneys in New York. Frank, who would be among the shareholders covered by the settlement, said the fees request was made at the expense of shareholders.
According to Frank, in some cases, plaintiffs’ attorneys billed more than $1,000 an hour for document review performed by outside contract attorneys. More typical rates, Frank said in a court filing, would be $50 an hour.
The case was finally ruled on last month last month and the folks at eDiscovery Daily have done a fine job detailing the Good, The Bad and The Ugly.
Actually, it was all ugly:
* Judge Stein carefully scrutinized the contract attorneys’ proposed hourly rates “not only because those rates are overstated, but also because the total proposed lodestar for contract attorneys dwarfs that of the firm associates, counsel, and partners: $28.6 million for contract attorneys compared to a combined $17 million for all other attorneys.”
*The proposed blended hourly rate was $402 for firm associates and $632 for firm partners. However, the firm asked for contract attorney hourly rates as high as $550 with a blended rate of $466. The plaintiff explained that these “contract attorneys performed the work of, and have the qualifications of, law firm associates and so should be billed at rates commensurate with the rates of associates of similar experience levels.” In response, the complaining shareholder suggested that a more appropriate rate for contract attorneys would be significantly lower: “no reasonable paying client would accept a rate above $100 per hour.”
* “There is little excuse in this day and age for delegating document review (particularly primary review or first pass review) to anyone other than extremely low-cost, low-overhead temporary employees (read, contract attorneys)-and there is absolutely no excuse for paying those temporary, low-overhead employees $40 or $50 an hour and then marking up their pay ten times for billing purposes.”
For their full post click here.